Law n° 2013-504 of June 14, 2013 had generalised the representation of employees on boards of directors or supervisory boards to all “major companies”.
Articles 10 and 11 of Law n° 2015-994 of August 17, 2015 on social dialogue and employment extends it to smaller undertakings and groups. Articles L.225-27 et seq. of the Commercial Code are amended accordingly.
What forms of companies are concerned?
Public limited companies (sociétés anonymes (SA)) and limited stock partnerships (sociétés en commandite par actions (SCA)).
What is the condition concerning the workforce?
They must employ, at the end of two consecutive financial years:
What is the purpose of the obligation?
To stipulate in the articles of association that the board of directors includes directors representing employees.
Are there any exceptions?
A company is not subject to this obligation if it is a subsidiary, direct or indirect, of a company itself subject to this obligation.
In the case of a company whose main activity is to acquire and manage subsidiaries and holdings, it can only implement the above obligations on the condition that it holds one or more subsidiaries fulfilling the conditions and applying those obligations.
NB: if the holding has a works council, it is subject to the above obligations.
How many directors representing employees are to be appointed?
There should be at least:
The directors representing employees are not taken into account when determining the minimum and maximum number of directors required under Article L. 225-17, or for the application of the first paragraph of Article L. 225 -18-1.
Must parity be respected?
The election of directors representing employees must respect parity in accordance with Article L. 225-28.
When two directors are appointed, the group committee, the central works council or the works council appoints a woman and a man.
Within what time frame should this obligation be implemented?
Within six months of the end of the second of two consecutive financial years in which the workforce threshold was reached.
What must it be done in concrete terms?
The Extraordinary General Meeting will proceed with the amendment of the Articles of Association to determine the conditions under which the directors representing employees are appointed.
What are the roles of the works council, the group committee or of the central works council?
To issue an opinion on the conditions under which directors representing employees are appointed.
Can we choose the method of appointment of directors?
Yes, but following one of the procedures below:
1° The organisation of an election among the employees of the company and its subsidiaries, direct or indirect;
2° The appointment, depending on the case, by the group committee provide for in Article L. 2331-1 of the Labour Code, the central works council or the works council of the company referred to in point I of this Article;
3° The appointment by the union having obtained the highest number of votes in the first round of elections in the company and its subsidiaries, direct or indirect, whose registered office is located on French territory, when a single director is to be appointed, or for each of the two unions having obtained the highest number of votes in the first round of these elections when two directors are to be appointed
4° When at least two directors are to be appointed, the appointment of one of the directors according to the procedure set out in 1° to 3° and the other by the European works council, if one exists, or, for European companies within the meaning of Article L. 2351-1 of the Labour Code, by the employee representative body referred to in Article L. 2352-16 of the same Code or, otherwise, by the committee of the European company referred to in Article L. 2353-1 of said Code.
When should the election or appointment of directors take place?
The election or appointment of directors representing employees takes place within six months of the amendment of the Articles of Association.
On what date do the directors take up office?
In principle, no later than six months after the general meeting deciding on the statutory amendments necessary for their election or their appointment.
In the companies concerned that were not previously subject to this obligation and one of whose subsidiaries, direct or indirect, is subject to this obligation, directors and members of the Supervisory Board representing employees must take up office no later than at the end of the terms of office exercised, in the above-mentioned subsidiaries, by the administrators and members of the Supervisory Board representing employees.
When is the general meeting mentioned to be held?
At the latest within six months of the end:
What is the penalty for non-compliance with this obligation?
If the extraordinary general meeting is not held within the period specified in the first paragraph of point III, any employee can ask the presiding judge acting in summary proceedings to order the Board, subject to a fine, to convene an extraordinary general meeting and to submit to it the draft resolutions to amend the Articles of Association as provided in the same point.
What if the injunction is not respected?
If the Articles of Association have not been amended by the end of the period laid down, the employees are appointed by the election referred to within six months following the expiry of the same period.
Any employee may ask the presiding judge acting in summary proceedings to order the company, subject to a fine, to organise the election.
What is the date of entry into force of the new law?
Immediate.
